Goldman will pay the SEC $450,000 to settle a naked-short selling penalties claim, according to the AP.(The claim is wholly unrelated to the SEC’s fraud case against Goldman and the rumoured criminal investigation being brought by the Manhattan DA)
Goldman hasn’t denied or admitted guilt, but the penalty is based on Goldman’s not providing shares it shorted within three days. Usually when shares lapse the three days, it’s because they’ve been naked shorted.
Ordinarily, traders must borrow a stock or make they can before they sell it short. But sometimes they don’t check, or something gets lost in the crosswires and the shorter ends up without the shares within three days.
We wouldn’t be surprised if this marked the beginning of a string of settlements to put its legal issues behind the firm.